A u t h o r i t a t i v e r e s o u r c e f o r a s u s t a i n a b l e , p r o f i t a b l e , a n d g r o w i n g W e s t e r n h a r d w o o d i n d u s t r y .

January 2017

In this issue:

* Outlook* News* Upcoming Events* Classifieds

No. 574January 2017

WHA Board of Directors - Officers

Kurt Landwehr President

Nils Dickmann Vice President

Jeff Stoddard Treasurer

Lee Jimerson Immediate Past President

WHA Board of Directors - Board MembersAaron BlumenkronTricia KilrainScott LeavengoodMike Lipke

Doug MartinJamie PriceLindy StallardStephen Zambo

David SweitzerSecretary/ManagerPO Box 1095Camas, WA 98607Ph: (360) 835-1600Fax: (360) 835-1910Web: www.westernhardwood.orgEmail: wha@westernhardwood.org

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Member

Membership News

Have a Happy and Profitable New Year! The Association is working hard to help you make it happen. We are investing time and money to get more timber sustainably harvested, educating land owners about the advantages of managing hardwoods, and promoting the green effect of wood over concrete and steel.

In addition, the WHA membership committee is looking at ways to add benefits making your membership even better. This could include a new dues structure. In the meantime, dues notices were mailed out December 1st, due January 1st. They can be paid online at www.westernhardwood.org.

Thank you for your continued support and confidence.

Dave SweitzerSecretary/Manager

The December 8th board meeting and tour at Goby Walnut Products in Portland, Oregon, was postponed due to icy roads and will be rescheduled after the first of the year with special guests from Oregon Wood Innovation Center attending for a round table discussion about innovative new uses for hardwoods. All members are invited so watch your email for the date notification.

Outlook

Mostly positive comments were offered this month on the West Coast. One lumber source in Oregon said this is usually a good time of year for business and his market is fairly stable now, although he is expecting it to taper off the second part of December.

Another contact in California likes the state of his market, saying that currently, it is pretty good. He noted that this is usually a good time of year for them and this year is turning out the same way. They are getting a lot of the typical “I need my kitchen done by the holidays push”.

A Washington lumber source that handles alder, Pacific Coast maple and Pacific Coast

cottonwood, said the market in his area is “fair, with mixed signals.” They have some distributors that say they are very busy and some that aren’t. He is anticipating the usual slow down around the Chinese New year, but in January, expects business to pick back up.

Preliminary October housing data indicate unusually strong fall construction and sales activity, which, together with the post-election market bounce, is lending support to some fairly optimistic forecasts for the U.S. housing sector in 2017. If the preliminary data hold up to future revisions, actual single-family housing starts (not seasonally adjusted) rose in September and October, which almost never happens. Actual single-family existing home sales in October were just ahead of October 2015, and single-family new home sales were 15% higher than last October. And, single-family sales and starts have grown aggressively the last two years, with new home market activity outpacing existing home sales. Based on year-to-date data through October, we estimate single-family housing starts will finish 2016 up 10% form 2015, while new and existing single-family home sales will be up 12.6% and 3/3% respectively, from 2015 totals. - excerpted from Meyer, Dan. “Housing Outlook 2017 Is Early Exuberance Warranted?” Hardwood Review Express 16 (2 December 2016): n. pag.

Slow but steady growth has been the hallmark of the post-Great Recession housing market recovery. That description has held true so far in 2016, with single-family housing starts up 10% year-to-date through November. The general consensus among prognosticators is the 2017 will be another good year, with single-family starts 12-15% stronger (Freddie Mac/National Association of Home Builders (NAHB)). Those projections however, were made before the Federal Reserve raised its benchmark interest rate by a quarter point in December. The question now is, how much will the Fed rate hike help or hurt the housing market? - excerpted from Burbeck, Tony. “The Fed Interest Rate Hike - Will It Help or Hurt Housing?” Hardwood Review Express 16 (2 December 2016): n. pag.

After a burst of post-election enthusiasm, several reports out in December reminded us that the economy continues to have some challenges, despite recent progress. For instance, new manufacturing production data, down 0.1 percent in November, were disappointing following two months of gains.

There were similarly discouraging numbers in the housing and retail markets. While Americans have generally been more willing to open their pocketbooks in recent months, retail sales pulled back in November from the strong gain in October.

Consumers and businesses have been very optimistic since the election, and this has been reflected in a number of surveys. In mid-December, this included home builders, who sent the Housing Market Index up to the highest level of confidence since July 2005, and small business owners, who pushed the Small Business Optimism Index to a 23-month high.

The Census Bureau and the U.S. Department of Housing and Urban Development reported that new housing starts declined 18.7 percent in November. At the same time, single-family starts also decreased in November, down from 863,000 to 828,000, but remain elevated relative to prior

months. That more upbeat assessment can also be seen in the housing permits figures, despite some easing in this latest release. Permitting for new residential units declined from 1,260,000 unites at the annual rate to 1,201,000. - excerpted from Moultray, Chad, Ph.D., CBE. “Monday Economic Report.” NAM. National Association of Manufacturers, 19 Dec. 2016.

Update from Hardwood Federation

In the weeks since the election, there have been a handful of developments on the Treasury’s proposed Sec. 2704 regulations. On the Monday of Thanksgiving week, House Ways and Means Committee Chairman Kevin Brady, reaffirmed his commitment to work with the incoming Administration to “stop on day 1, the new proposal on the death tax and family owned businesses.” In addition to having the new Treasury team withdraw the proposed Sec. 2704 regulations, Chairman Brady and his staff continue to discuss his desire to repeal the death tax entirely via tax reform.

Believe it or not, preparations have begun for the next Farm Bill, which Congress will reauthorize in 2018. The kick-off meeting of the Forests in the Farm Bill Coalition was held last week and your HF team was on hand to weigh in on our priorities. Obviously we will be advocating for reauthorization and full funding of the Market Access and Foreign Market Development programs. As we are all painfully aware, efforts ramp up every year to kill these two programs, despite the fact that they have such a positive impact on U.S. exporters. Based on initial discussion, the FIFB Coalition’s platform will also have a “Markets” policy plank to help drive demand for U.S.-made forest products. The idea here is that growing markets for wood is the key to keep working forests working, since most of the forestland in the U.S. is privately held. Policies could range from the Timber Innovation Act to community scale wood heating programs that could help draw down surplus sawdust at our facilities. We will be reaching out to you to solicit thoughts on areas that our advocacy we should focus on as efforts kick into high gear next year.

Dana ColeHF Executive Director

News

In the anti-dumping/countervailing duty case brought by 6 U.S. hardwood plywood manufacturers against Chinese producers, the U.S. Department of Commerce found preliminary dumping margins of over 100% and identified 30 Chinese government subsidy programs that may be countervailable. Further investigation by Commerce depends on the International Trade Commission deciding that these dumping margins may cause injury to U.S. industry and that this warrants further investigation. The ITC will vote on December 30th to determine if U.S. industry is being damaged by Chinese hardwood plywood imports and if a full investigation is required. The commissioners’ opinions and staff report will be available in January. - Source: HPVA®; Woodworking Network, December 13; Reuters, December 12, 2016; ECNS, December 13, 2016.

Forest area in the U.S. increased by nearly 8,000 acres per day from 2007 to 2012. The volume of wood in U.S. timberlands increased 16 million cu.ft. over that 5-year period, enough to fill 159 Empire State Buildings per year. In 2015 alone, the U.S. recovered enough recycled paper to fill 125 Empire State Buildings. From 2005 to 2015, U.S. forests stored 169 million metric tons of carbon per year, equivalent to taking 137 million cars off the road every year. - Riebel, P. (2016, December 7). Some Thought-Provoking Facts on Paper, Forests and Recycling. http://www.twosidesna.org/US/Some-Thought-Provoking-Analogies-on-Paper-Forests-and-Recycling

The urban-rural divide, although glaringly visible during the presidential election, is “not so difficult to jump over,” outgoing U.S. Agriculture Secretary Tom Vilsack said. Vilsak said the desires of people living in urban centers are precisely what rural residents want. They want a country they’re proud of, he said, and they want to make a living, give back and take part in their communities. Read more...

It’s estimated that 15% of China’s timber imports are illegal, based on the most recent data available. China, the largest global timber importer, saw demand double from 2000 to 2012 for both domestic and export markets. China is a particularly important market for high-value hardwoods, for which there is significant illegal trade. Mozambican authorities recently confiscated a large haul of illegal timber in the northern port of Nacala. Authorities believe that the 1,300 containers of logs were en route to China. - Illegal Logging Portal. (n.d.). Retrieved December 26, 2016, from http://www.illegal-logging.info/regions/china; Illegal Logging Portal. (n.d.). Retrieved December 26, 2016, from http://www.illegal-logging.info/regions/china

For the second time in as many years, employees of an Omak mill are preparing to lose their jobs around the new year. In December, the 217 employees of the Omak Forest Products mill received notices of termination that will be effective January 29th, essentially announcing the end of the Omak Forest Products’ operation of the tribally-owned facility in Omak, WA. - Caudell, J. (2016, December 12). Omak Forest Products to close doors after 11 months. http://www.tribaltribune.com/news/article_d748fb26-c0d3-11e6-b2f9-1b65c425f1ad.html

You have probably bought forest products like lumber for a home reno or notepaper for school supplies and wondered how your purchase affects the forest it came from. You may feel guilty, but you shouldn’t if the forest products you buy are harvested sustainably and certified to internationally recognized standards. In fact, you should feel proud. You’re actually a fully qualified forest hugger if you buy forest products from well-managed forests that provide conservation benefits like clean air and water, habitats for a variety of species and recreational opportunities. Read more...

Trees killed by mountain beetles were used to construct a seven-storey tower in Minneapolis by Michael Green Architecture, which is described by the firm as the first modern tall wood building in the United States. As one of several architects embracing massive timber, or mass timber – the collective term for engineered wood products like glulam and cross-laminated timber – Canada-based Michael Green has pushed the limits of the material with his latest project. - McKnight, J. (2016, December 2). Michael Green Architecture completes largest mass timber building in United States. Retrieved December, 2016, from https://www.dezeen.com/2016/12/02/michael-green-architecture-t3-largest-mass-timber-building-usa-minneapolis-minnesota/

Zinke of Montana Gets Nod for Department of Interior: This week, President-Elect Donald Trump formally announced that freshman Congressman Ryan Zinke (R-MT) was his nominee to be the next Secretary of Interior. An up-and-coming member of the House of Representatives, Zinke currently serves on the House Committee on Natural Resources and sits on the Federal Lands Subcommittee.

Zinke has vocally supported keeping Federal public

lands in Federal ownership (rather than transferring them to the States), and he has also reached across the aisle to work with Democrats in hopes to fully fund of the Land and Water Conservation Fund. At the same time, he’s called for a greater State role in Federal management, and expressed concerns about the effectiveness of the Endangered Species Act.

Zinke was a co-sponsor of the Resilient Federal Forest Act, passed in the House but not the Senate, that would shift the largest wildfire costs to FEMA, rather than the continued cycle of wildfire borrowing that has hobbled the US Forest Service. Last week, he announced his intention to introduce a bill to reverse the disastrous Cottonwood decision, which would leave dozens of land management projects vulnerable to frivolous litigation and delays. - excerpted from Imbergamo, Bill. FFRC Weekly Report (16 December 2016): n. pag. Print.

Five of the West’s leading policy organizations shared Principles to Clarify and strengthen the State-Federal Relationship with president-elect Donald J. Trump and Congressional leadership this week. The principles advocate for state, local and federal government officials to work in a “true partnership.” The Western Governors’ Association, Conference of Western Attorneys General, Council of State Governments West, Western Interstate Region of the National Association of Counties, and the Pacific Northwest Economic Region collaborated on the formulation of the principles.- excerpted from Imbergamo, Bill. FFRC Weekly Report (16 December 2016): n. pag. Print.

Bipartisan, Bicameral Bill to Reverse Harmful Cottonwood Decision Introduced: Montana Senators Steve Daines (R) and Jon Tester (D), along with Rep. Ryan Zinke (R-MT) Thursday introduced legislation intended to reverse the ruling of the Ninth Circuit Court of Appeals in Cottonwood Environmental Law Center v. U.S. Forest Service, saying the ruling threatens the Forest Service’s ability to manage forests, recreation, and wildlife.

The bill seeks to codify the Obama administration’s position that federal agencies are not required to consult with the Fish and Wildlife Service at a programmatic level when new critical habitat is designated or a new species is listed. To be clear, what Cottonwood does is allow anti-management groups to block projects by forcing the Forest Service and Fish and Wildlife Service to “consult” under the ESA’s Section 7, not over the specific project, but over general land management plans that have, in some cases, been on the books for decades. - excerpted from Imbergamo, Bill. FFRC Weekly Report (9 December 2016): n. pag. Print.

The Energy Bill went down in flames as Congress quickly concluded its “lame duck” session by approving a continuing resolution to keep the federal government running while putting key issues to next year. Consequently, Congress took no action on comprehensive energy

legislation that included a fix to federal wildfire spending as well as incremental forest management reforms to promote more work in the woods.

Obama Administration Prepares to Bow Out and 114th Congress Stumbles to the Exit: The Obama Administration heads for the exit in just four weeks, having marginally increased Forest Service timber outputs, while missing opportunities to make more lasting change at the Forest Service. BLM timber outputs were largely flat over the course of the Administration’s term. The 114th Congress, which is expected to adjourn today, on the other hand, largely failed to address the major challenges facing the Forest Service, while supporting increases in timber outputs. -- excerpted from Imbergamo, Bill. FFRC Weekly Report (9 December 2016): n. pag. Print.

Forest Service Timber Outputs, 2006-2016Fiscal Year Volume Sold

(BBF)Value ($mil) $/MBF

2009 2.507 $103.3 $41.22

2010 2.536 $136.3 $52.51

2011 2.536 $152.0 $59.92

2012 2.644 $155.0 $58.65

2013 2.607 $159.2 $61.08

2014 2.824 $199.1 $70.49

2015 2.873 $202.7 $70.56

2016 2.942 $186.5 $64.99

U.S. District Judge Amos Mazzant issued a nationwide injunction against the U.S. Department of Labor’s new overtime rule on November 22. The Texas federal judge declared the regulation unlawful, as federal law uses more than just pay level to determine if an employee is eligible for overtime. The new rule created “a de facto salary-only test” which is not in the statute. The new regulation would have made salaried employees earning up to $47,476 per year eligible for overtime, up from $23,660. - Slowey, K. (2016, November 23). Federal judge blocks Labor Dept. overtime rule. http://www.constructiondive.com/news/federal-judge-blocks-labor-dept-overtime-rule/431090/

After the most recent aerial survey, the U.S. Forest Service estimated that 6 years of drought in California has left 102 million dead trees across 7.7 million acres of forest. “The scale of die-off in California is unprecedented in our modern history,” said Randy Moore, a USDA forester. He added that trees are dying “at a rate much quicker than we thought.” Bark beetle infestation and warmer temperatures also contributed to the tree deaths. - “102 Million Trees Have Died in California’s Drought.” MyScienceAcademy. N.p., 23 Nov. 2016. Web. 27 Dec. 2016.

During a pre-election campaign visit to Eugene, OR, Donald Trump stated that Oregon’s timber jobs had been cut in half since 1990. While he was not specific, he alluded to loosening federal regulations as a means to revive the industry. Oregon’s timber industry has faced severe restrictions against logging in federal forests for decades. - Darling, Dylan. “Oregon timber interests welcome Trump win.” The Daily Astorian. N.p., 17 Nov. 2016. Web.

Cyber Attack -- Information You Should Know

By: Jodi Cordes, CIC, CRM, VP PIA of Wisconsin. Republished with permission.

This stuff is really happening in the big cities, and the small towns in Wisconsin. Recently, our City of Lake Geneva

put together an education session on Cyber Security for local business operators. The speaker was an agent from the FBI’s Internet Crime unit in Milwaukee. From those couple hours, I learned a lot of frightening

information; good information for us agents to share with our customers when talking about Cyber Liability (which I am sure you are all discussing with clients along with hired/non-owned auto liability and EPLI coverage, right?)

The first part of the conversation should be education or identifying what the potential risk is. A crazy fact is that most of the cyber attacks are probably coming from outside of our country. Korea, China, Russia and Iran are where many of the attacks originate. They are not just after the large corporations either. Hackers are finding it easier to attack the small to middle sized business because they typically do not have full time IT department, or have securities/procedures in place to stop an attack.

The #1 threat is spear phishing which is specific to a person. The attacker makes contact with employees and gains their trust (often by simply offering an innocent looking link in an email. Once the employee clicks on it, a RAT (Remote Administration Tool) is now in their computer. The hacker can access customer files, company data, pictures, web cam to take pictures of you, access your microphone to hear you even off line, screen shots to see what sites you go to, get passwords, and even take over your computer. This is some really frightening stuff. Think about if this happened to a computer of a bookkeeper or the president of the company.

The second part of your conversation should be to analyze where your client may have a threat and discuss ways to control the threat. Here are some recommendations to help minimize an attack.

• Install Microsoft EMET software. There is a free

Photo © USFS Region 5

Upcoming Events

January 19, 2017Mapping the Course: Timberlands, Forest Products, Processing and Fiber Issues for 2017Vancouver, WAEmail: richard@westernforestry.org

January, 2017Western Hardwood Association Tour, Luncheon, and Board MeetingPortland, OREmail: wha@westernhardwood.org

March 28-30, 2017MassTimber ConferencePortland, OREmail: craig@forestbusinessnetwork.com

August 22-24, 2017Western Hardwood Association Annual ConventionPortland, OREmail: wha@westernhardwood.org

Submit your classified ad by January 20th for the February 2017 issue of Hardwood Stand towha@westernhardwood.org.

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Wood-Mizer offers portable and industrial sawmills, resaws, edgers, kilns, log splitters, material handling equipment, bandsaw blades, and blade maintenance equipment for woodworking hobbyists and forestry professionals all over the world. Contact: Brett Lottman at blottman@woodmizer.com or (503)661-1939.

Abenaki Timber, your trusted supplier of fine Northern and Appalachian Kiln-Dried hardwoods. We produce 4/4 8/4 in most species and grades and offer Sorting, S2S, SLR1E and Ripping. www.AbenakiTimber.com. Nils Dickmann Nils@abenakitimber.com (206)661-4685.

C l a s s i f i e d s

version.• Turn on Auto Updates so antivirus softwares are

automatically updated.• Never open suspicious attachments/hyperlinks (xcel,

doc, jpeg, etc.)• Look for spelling errors. (Since many attacks come

from overseas they tend to have many spelling errors translating into English language.)

• Look at who the email is from. If it doesn’t make sense with the subject manner, delete without opening.

• Hover over hyperlinks prior to opening. Verify the website address makes sense with subject manner.

• Never click on pop ups.• Be aware of “watering hole attacks” these are sites

that are less protected that hackers prey on. They infect the site and when you go there it attaches malware to your computer and they start watching everything you do on your computer.

Portable Devices • Beware of malicious apps.• Beware of foreign “updates”.• “Man in the Middle” attacks are fake wi-fi hot spots.• Disable geo tagging photos, especially when

uploading to social media. These include the longitude/latitude of exactly where you are, where your kids are, where your house is, etc.

• Disable Bluetooth when not in use.• Use a different phone when traveling out of the

country (FBI says especially China)• If foreign officials ask for your device, assume your

hard drive has just been copied.Obviously these lists can go on and on forever. But I

found these to probably be the quickest, easiest things that many of us don’t even think about.

After you scare the client from ever using their computer or mobile device again, then you can have the conversation of how there are insurance tools to help them in the event that they are attacked. Many of these cyber insurance carriers also have resources to help the insured implement additional safety precautions to minimize the threat.

Lastly, once you have identified, analyzed, addressed control measures and implemented a company policy, then monitor the program. Hire a reputable pen tester at least once a year to find weaknesses in the system.